Brokers predict 100% upside for Lake Resources stock price

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The Lake NL Resources (ASX: LKE) stock price rose Tuesday afternoon.

At the time of writing, shares of the lithium developer are up nearly 3% to $1.29.

This means the Lake Resources share price is now up 19% year-to-date.

What’s next for the Lake Resources stock price?

While opinion is fiercely divided on this heavily shorted lithium share, a top broker who is well and truly sitting on the bullish side of the close is Bell Potter.

According to a note released this morning, the broker maintained its speculative buy rating with a reduced price target of $2.54.

Based on the latest Lake Resources share price, this implies a potential return of almost 100% for investors over the next 12 months.

What did the broker say?

Bell Potter notes that Lake Resources is currently transitioning into project development and has appointed a new CEO to lead the charge. It said:

LKE’s near-term outlook is centered on the delivery of the Kachi Project’s Definitive Feasibility Study, demonstrating the larger-scale success of the direct ion-exchange lithium extraction technology that the project will utilize, and ultimately coordinating binding lithium offtake and debt financing agreements. The March 2021 pre-feasibility study indicated lithium carbonate production of 25 ktpa at a capital cost of US$544 million; the DFS is currently evaluating a project with a production of 50 ktpa. LKE has sufficient funds to bring Kachi to development with cash as of June 30, 2022 of $175 million as of June 30, 2022. A new chief executive has been appointed to move the company into development.

However, given the doubts about the company’s direct lithium mining technology, the broker acknowledges that demonstrating how it works will be very important in the near future. As this is not guaranteed, this explains why Bell Potter’s buy rating has a speculative Attention.

The broker commented:

LKE’s Kachi lithium project in Argentina is strategic in terms of scale, applied technology and no-commitment product purchase. Demonstrating the feasibility of lithium extraction by ion exchange is essential to reduce project risks; success will disrupt traditional lithium brine production. The technology also brings significant ESG benefits, including reduced ground disturbance and water consumption. […] LKE is an asset development company with forward-looking operations and cash flow. Our speculative risk rating takes into account this higher level of risk and the volatility of returns.

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